Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd & Anor

A commercial contract must be construed as a whole, against the relevant objective background, while giving proper weight to the words used. A final agreement or determination fixing estimated rehabilitation costs and the purchase price cannot ordinarily be reopened through a later contractual adjustment mechanism. A later approval mechanism applies only to genuinely unforeseen work required by an approval within its defined scope, not to work merely recorded or confirmed by an approval. Contractual obligations expressed as mandatory duties are not conditional upon a request unless the contract clearly makes them so. Where the innocent party performs the other party’s work, damages are normally measured by the reasonable cost to the defaulting party of performing it, subject to mitigation.

The claimant purchased a development site from the defendants under a Sale Agreement. The price was subject to adjustment under clause 7A for the final or estimated costs of specified rehabilitation works. Clause 14A provided a further mechanism for certain approval-related costs, while clauses 12.2 and 12.3 required the defendants to provide haulage and remediation assistance.

The parties later settled most cost issues, expressly preserving limited exceptions concerning a balancing pond, a pumping station and changes to the Link Road. The claimant subsequently advanced 28 claims for declarations, together with damages for remediation works and diversion works at Sandhills Lane. The central issues were the construction and finality of the adjustment mechanisms, the scope of the preserved exceptions, and the defendants’ liability for work which the claimant had performed itself.

1. Contractual adjustment mechanisms. Clause 7A was intended to produce a prompt, final and binding determination of the rehabilitation costs and the purchase price. The costs could include projected future expenditure. The scope of each item depended on the wording of the Sale Agreement, not on non-contractual schedules or quantity-surveyor documents.
2. Relationship between clauses 7A and 14A. Costs taken into account in the calculation of the price under clause 7A could not be reopened under clause 14A. Clause 14A was confined to limited further adjustments for genuinely unforeseen work required by a qualifying approval obtained after the price had been fixed. Work merely referred to or confirmed in an approval was insufficient; the work had to be required by it.
3. Scope of approvals. The relevant Link Road approvals under clause 14A.1(b) were approvals from Hampshire County Council acting as highway authority. They did not include Gosport Borough Council’s planning requirements or approvals already in existence when the Sale Agreement was made.
4. Declarations. Most of the 28 claims had been settled or fell outside clauses 7A and 14A. Limited declarations were granted for specified asterisked items concerning the balancing pond and pumping station, for the re-routing of the Link Road at the southern junction, and for reasonable negotiation costs incurred in obtaining qualifying approvals.
5. Remediation works. Clauses 12.2 and 12.3 imposed mandatory obligations on the defendants. The words requiring performance in accordance with the claimant’s reasonable requirements governed the manner and timing of performance and were not a condition precedent requiring an express request. The defendants were therefore in breach.
6. Waiver, estoppel and mitigation. The claimant’s conduct did not establish a clear and unequivocal waiver or representation, reliance or detriment. The claimant’s failure to require performance affected the measure of loss, not the existence of the breach. Damages were to be assessed by the notional cost to the defendants of performing the work, including the Landpac dynamic compaction method, but excluding the additional cost of placing and compacting one-metre layers in phase 7.
7. Sandhills Lane. The defendants were liable under clause 16.2 for 95 per cent of the diversion costs, reflecting the proportion attributable to their continuing use of the adjoining land. The sum awarded was £46,920.10.